The Federal Government, through the Nigerian National Petroleum Company Limited, has paid $3.81bn cash call arrears in joint ventures to international oil companies, The Punch has learnt.
Figures seen in Abuja on Thursday showed that the $3.81bn repayment was done as at May 31, 2022, leaving an outstanding balance of $873.34m. The total negotiated debt between the government and the five IOCs was put at $4.68bn.
Cash calls are sent by joint venture operators to non-operating partners for payment in the light of anticipated future capital, operating expenditures or the need for additional capital contributions.
The Federal Government, through the NNPC, had over the years piled up unpaid bills, referred to as cash calls, which it was obliged to pay the IOCs with which it had joint ventures for oil exploration and production.
The government’s joint venture partners in this arrangement include: Shell Petroleum Development Company, Mobil Producing Nigeria, Chevron Nigeria Limited, Total Exploration and Production Nigeria, and Nigeria Agip Oil Company.
The report on latest cash call arrears repayment obtained by our correspondent from the NNPC indicated that the total negotiated debts of $833.75m and $1.09bn for Mobil and Chevron respectively, had been cleared by the government.
The total negotiated debts for SPDC, TEPNG and NAOC were put at $1.37bn, $610.97m and $774.66m, while the total payments to date (May 31, 2022) to the three IOCs were $777.4m, $545.86m and $561.53m, leaving outstanding balances of $595.1m, $65.11m and $213.13m respectively.
The report showed that the total negotiated debt for all five IOCs was $4.68bn. Total payment to date as at the period of review was $3.81bn, while outstanding balance was $873.34m.
Experts encouraged the government to continue in the repayments of its cash call debts to the five IOCs, noting that the delay in settling the debts had contributed in slowing oil sector investments in Nigeria.
“You cannot owe me billions or millions of dollars and still want me to invest additional billions or millions in your country when I’m not sure of getting the money you owe,” a former President, Association of National Accountants of Nigeria, Dr. Sam Nzekwe, said in his reaction to the development.
He, however, lauded the government for striving to clear the cash call arrears, adding that “this would mean well for the oil sector and would encourage investors to invest in the industry, though the sector has its own challenges at the moment.”
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, earlier explained that the delay in cash call repayments had been a drag on the growth of Nigeria’s oil sector.